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Tuesday, December 18, 2012

Trading the ABC Sentiment Shifts Ahead Of The Crowd

Today David Banister shows us how to spot the 3 day rest B wave for profits......

One of the most obvious keys to successful trading or investing is buying low and selling high. The problem being if it was that easy to pinpoint those low and high points then all traders would be batting 1000%. What we use at my ATP service is a combination of fundamental analysis and catalyst spotting inter-twined with charting techniques. Most of our work revolves around buying substantial dips in a strong stock, 3x ETF’s, or reversal patterns. 3x ETF’s are great for short term swings as they function almost exclusively on crowd behavioral patterns, but it also applies to individual stocks.

In all cases what traders really need to spot ahead of the masses of investors is a subtle shift in sentiment. That key pivot point where the negative sentiment whether it be short term or long term is about to run out of gas, and the bullish sentiment is going to take over and reverse the stock or ETF higher or break the position out of a base pattern.

One of the most common patterns amongst many that we use as trigger points is the ABC pattern. This is a situation where the stock or ETF recently had a strong run. That run produced a flurry of over optimistic sentiment and is reflected in the high spike in the stock from the prior base. We call this the “A Wave High” pivot point. This is where many of the traders who chase short term performance come in with a bang, right near the top.